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									 CHAPTER 6

Management Information Systems,
Decision Support Systems, and
Executive Support Systems
Decision Making Level
Characteristics   Operational       Tactical         Strategic
                  decisions         decisions        decisions
Time period       Short term        Intermediate     Long term
affected                            term

Frequency         Frequently        Not so often     Rare


Structure of      Structured        Semistructured   Unstructured
problems
Source of         Mostly internal   Internal and     Mostly external
information                         External

Degree of         Detailed          Mainly           Summarized
detail            information       summarized       information
                                    information
                                                                    2
    Problem Solving Process
               Monitoring
  REALITY
                                  Intelligence Phase
              Verification
               of the Model
                                      Design Phase

 
SUCCESS
            Testing of Proposed
                 Solutions            Choice Phase

                    Implementation
                     of the Solution

                        FAILURE                       3
Decision Making

   Decision making:
     Intelligence
     Design
     Choice
   Problem Solving:
     Decision making
     Implementation
     Monitoring

                        4
Structured vs. Unstructured
Problems
 Structured problem requires
  programmed decision based on a
  known rule, formula or procedure
 Unstructured problem requires non-
  programmed decision based on the
  individual knowledge and expertise.
 Semistructured problem requires
  combination of both types of decisions

                                           5
Programmed vs. Non-programmed
Decisions
   Programmed decisions
     Decision made using a rule, procedure, or
      quantitative method
     Easy to computerize using traditional
      information systems
   Non-programmed decisions
     Decision that deals with unusual or
      exceptional situations
     Not easily quantifiable
                                                  6
Management Information
Systems
 Provide routine information to managers
  in the functional areas
 MIS inputs:
     Come from TPS
     Internal databases
     External databases
   MIS outputs – various reports

                                            7
MIS outputs
   Routine, scheduled report – is produced
    periodically
   Key-indicator report – a summary of previous
    day critical activities
   Demand (ad hoc) report – is developed at a
    person’s request
   Exception report – is automatically produced
    when a situation is unusual
   Drill-down report – provides increasingly
    detailed

                                                   8
Functional Aspects of MIS
  Financial MIS
  Manufacturing MIS
  Marketing MIS
      Customer relationship management
  Human resource MIS
  Accounting MIS



                                          9
Business Concepts Supported by
MISs (examples)

   Economic order quantity (EOQ)
   Reorder point (ROP)
   Just in time (JIT) inventory
   Quality control




                                    10
Intelligence Stage of Decision
Making
   Initial stage in which potential problems
    or opportunities are defined:
       Evaluation of information
       Qualitative analysis
       Quantitative analysis
       Interpretation – Is there is a problem
        (opportunity)


                                                 11
Design Stage of Decision Making

 Second stage of decision making
 Alternative solutions to the problem are
  developed:
       Formulate a model
       Set up criteria for choice
       Search for alternatives
       Evaluate outcomes

                                         12
     Models
 A model is a simplified representation of
  reality
 Models classification:
     Mental model is a narrative description of reality
     Iconic (scale) model is a physical replica of a
      system, which is based on a different scale from
      original
     Analog model - a physical model, but the shape
      of the model differs from that of the actual
      system
     Mathematical (quantitative) model describes a
      real system based on mathematical formulas
      and constructs
                                                           13
Mathematical Models

 Model variables – investigated
  characteristics of real world system
 Parameters – represent internal and
  external conditions
 Managerial decisions are reflected in
  model’s initial values and parameters


                                          14
Model Classification

   Optimization model
     allows to find the best solutions
   Satisficing model
     Allows to find good, but not always best
      solution
   Heuristic – commonly accepted
    guideline or procedure

                                                 15
Choice Stage of Decision Making

 Requires selecting a course of actions
 Include steps:
     Selection of best (good) alternative
     Plan for implementation
     Design a control system




                                             16
    A Framework for Computerized
    Decision Support
 Structured decision making process – all
  stages are structured
 Semistructured decision making
  process – not all stages are structured
 Unstructured decision making process –
  all stages are unstructured, require
  intuition and knowledge
                                             17
    Requirements for DSS
   Support all problem-solving phases
   Support different decision frequencies
   Support different problem structures
   Support various decision-making levels
   Support several interdependent and/or
    sequential decisions
   Utilize models or complex computations



                                             18
Type of Data Processing

                Decision Support



   Data Driven                      Model Driven
 Decision Support                  Decision Support


   OLAP, data
                                        Models
    mining

                                                      19
Components of DSS
 DSS is an information system
 DSSs are supported on the
  software level
     Database (including management
      component)
     Model base (including management
      component)
     Dialogue manager (User interface)

                                          20
Decision Support Systems

   Individual DSSs:
     Functional analysts
     Low-level managers
   Group Decision Support Systems
    (GDSS):
     Groups of managers
     Top-level managers

                                     21
Group Decision Support Systems
   Specially designed
   Network component
   User-friendly
   Flexible
   Support collaboration of geographically
    dispersed users
   Contain nominal group techniques:
     Send feedback       Votes
     Anonymous inputs    Keeping records
                                              22
Executive Information Support
 Integration with DSS
 Are tailored to individual executives
 Support a decision making process with
  a high degree of uncertainty
 Access to the external information and
  knowledge
 Are future oriented:
     Support strategic planning and
      management                           23
Geographical Information
systems
 DSSs supporting decision making
  process using digital maps
 Contain geographically referenced data
  tying to objects on a map
 Analytical tools, spreadsheets, expert
  system shells are additional
  components

                                       24
Comparison of DSS and MIS
       Factor        DSS                MIS

Problem Type    Semistructured Structured
                and unstructured
Goal            Help to make a   Provide
                decision         information in a
                                 timely manner
Users           Decision makers Organizational
                                employees


                                                    25
Comparison of DSS and MIS (cont…)
Factor        DSS                   MIS
User’s        Select or construct   Very little or none
involvement   models, plan
              experiments
Scope         Process of            Information
              decision making
Output        Interactive, is       Soft and hard
              displayed on the      copies of reports
              screen                are generated
Type of       Online processing     Hybrid processing
processing
                                                          26

								
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